Let's say you've found a house you really like. It's listed at $400K. We've looked at the comps together, and it seems like $400K is a fair price... though depending on the buyer, it could reasonably be worth $405K or $410K to some people.

Now let's say there are multiple offers. You have a decision to make.

You could offer $400K -- the list price. 

You could offer $400K with an escalation clause, bumping up above any competing offer in increments of some amount, maxing out at $410K (the top of what we'd call the reasonable value range). 

Or you could stretch a bit further and escalate all the way up to $420K, going above what most would consider to be the best comparable sales.

So how do you decide?

Sometimes, it can be helpful to ask yourself... if you lose at this number... will you regret it?

If someone else gets the house for $401K or $405K, when you offered $400K, how does that feel? If the answer is "not that bad -- it wasn't perfect anyway," then maybe $400K is exactly where you should be. We'll find you another house.

But if the thought of losing it at $401K makes you hesitate or wish you had offered more... that might be telling you something.

We can ask the same question at each number. If you lose at $410K, will you regret it? Maybe not -- maybe $410K already felt like a stretch. If you lose at $420K? That one might sting more, but it also might feel like you gave it everything you had.

There's no universally right answer here. 

Some buyers are perfectly happy to offer the list price and walking away if it doesn't work out. Others would rather pay a little more and know they didn't leave anything on the table. Both are valid approaches.

The next time you get stuck figuring out what to offer or how high to go with an escalation clause, let's put it in the context of whether you will regret it if you miss out by stopping at a particular price.